France boosts say on GE bid for Alstom with takeover law

Thu May 15, 2014 5:00am EDT
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By Jean-Baptiste Vey and Benjamin Mallet

PARIS (Reuters) - The French government has issued a decree allowing it to block foreign takeovers of French firms in "strategic" sectors, throwing up a potential roadblock to General Electric's (GE.N: Quote) $16.9 billion bid for Alstom's (ALSO.PA: Quote) energy assets.

The decree, extending an existing 2005 law relating to the defense and other industries, was published in the official state gazette on Thursday and gives the state much-increased powers to block foreign takeovers in the energy, water, transport, telecoms and health sectors.

Any such acquisition will now need the approval of the Economy Minister, the decree published in France's Official Journal said.

The current minister, Arnaud Montebourg, has openly criticized the proposed Alstom-GE deal for fear of the impact on French jobs and prestige, and has instead advocated a European tie-up with Germany's Siemens (SIEGn.DE: Quote).

"With this new law, the risk that GE will reconsider its position increases, since additional concessions on a GE-Alstom deal will be sought by the French government to gain broader electorate support," Berenberg analysts said in a research note, adding it opened the door for an alternative deal with Siemens.

Alstom shares were down 1.1 percent to 29 euros at 0840 GMT, lagging a European blue-chip index .FTEU3 down 0.2 percent.

"With this reform, France will have a clear and efficient legal framework comparable to that in a number of other open economies within and outside Europe," Montebourg said in a statement.

"This new measure will of course be applied in a selective and proportionate manner, taking into account the merits of each situation," he said, adding the decree would take effect within 24 hours of publication.   Continued...

French Economy minister Arnaud Montebourg speaks during the questions to the government session at the National Assembly in Paris April 29, 2014. REUTERS/Charles Platiau